What are the Types of Surety bonds?

The three most common types of surety bonds are: Bid Bonds Performance Bonds Payment Bonds

Are Surety Bonds paid monthly?

No. You don't pay month-to-month for sureties. When you are quoted a price for a surety bond, you make a one-time payment.

How do I apply for a surety bond?

Applying for a surety bond, no matter the sort of bond, is to contact a surety agency. For instance, you can reach CSBA here to get started on obtaining your surety bond.

What is a payment bond?

A payment bond ensures that all of a contractor’s laborers, subcontractors, and suppliers are paid on a particular project.

Who requires payment bonds?

Payment bonds are required on almost all public projects. General contractors sometimes require them of their subcontractors, and occasionally private owners will require them.

Who pays for a payment bond?

The contractor, or principal, purchases the bond and pays for it.

Do Payment bonds expire?

Payment bonds expire after the project is completed and statutory timeframe have lapsed.

What is the difference between a surety bond and a payment bond?

A payment bond is a type of surety bond. The only real difference is the qualifying term, in this case, it's "payment" and only notes what sort of surety bond it is.

What does a performance bond cover?

The performance bond covers the owner of the project against losses if the contractor fails to deliver on the project within the contractual provisions.

How long does a performance bond last?

Since performance bonds guarantee the completion of the contract, they last until the project is finished along with any required warranty period included in the agreement.

When can you release a performance bond?

Usually, a performance bond is released when the project is completed, though some public projects stipulate that a contractor gives a warranty following completion that the performance bond covers.

What is the difference between a performance and a payment bond?

We have a detailed article that explains the differences here , but the short answer is that the performance bond secures the contractor's promise to complete a job within the terms and conditions outlined at the agreed price while the payment bond protects subcontractors, vendors, and laborers against nonpayment.

What is the difference between a bid bond and a performance bond?

Bid bonds are required when contractors bid a project and guarantees if they are low bidder, they will enter into the contract and provide any required performance and payment bonds. Performance bonds guarantee the actual performance of the work to be completed by the contractor according to the terms of the agreement. What happens to a bid bond after a contract is signed? The bid bond is replaced by a performance bond if the bid is accepted and the contractor enters into a contract with the owner or general contractor.

A Guide to Increasing Bonding Capacity

Improve Your Bonding Capacity

As your business grows, so inevitably will your bonding needs. Whether you are looking to pursue larger projects or your backlog is increasing, having the necessary bonding capacity is often the key that unlocks your ability to take advantage of those opportunities.

Increased bonding capacity is often a competitive advantage for contractors. It allows you to separate yourself from the pack and bid on projects that others can’t as less competition usually comes with better profit margins.

The Guide to Increase Your Surety Bond Capacity

To help California contractors understand bonding capacity and how to increase it, we’ve assembled this handy guide below to help you navigate the processes along with tips for increased capacity.

Name

This field is for validation purposes and should be left unchanged.

Work with the Right Surety Bond Agency

It’s important that you’re working with the right surety bond agency. They can guide you through all the ins and outs, make sure your financial statements and team are up to standard, and walk you through the entire process of increasing your bond capacity. In that spirit, we have put together articles to help you navigate increasing bonding capacity. We encourage you to read through the topics below to learn how it is calculated, and the steps you can take to increase it.

How the SBA Bond Program Can Increase Your Bonding Capacity

Does Requiring Bonds from Subcontractors Increase Bonding Capacity?

3 Things Contractors Can Do to Increase Bond Capacity Immediately

CSBA is the Right Surety Agency for the California Contractor

Anyone in business knows that experience, reputation, and relationships make all the difference. At CSBA, we don’t just dabble in bonds like many insurance agents. It’s all we do day in and day out. We eat, sleep, and breathe the construction and surety.

The trust with our surety companies has been built up over decades. We’ve done so by being selective in the contractors we work with, taking the time to get to know them intimately, providing guidance to help our customers avoid the many pitfalls inherent in the construction industry, and being proactive with both our contractors and sureties to ensure a smooth and effective relationship.

The front-end work we do helps our contractors be more successful, which has led to better contractors customers for our sureties with fewer claims against their bonds. It’s a true win-win, and as a result, our sureties put more trust and confidence in us than other agents, which ultimately allows us to get more done for our contractors.

In addition to our strong relationships, our position as one of the largest surety agencies in California enables us to represent more surety companies than other agents, some of which are semi-exclusive to us. This allows us to provide more options to our contractors to ensure we get a bonding program in place that meets their unique needs.